Brief Definition
A business combination is a transaction or event in which one company acquires control over one or more businesses. This can involve the purchase of a controlling interest in another company, merging with another company, or acquiring its net assets.
Further Explanation
A business combination is a transaction or event in which one company acquires control over one or more businesses. This can involve the purchase of a controlling interest in another company, merging with another company, or acquiring its net assets. Business combinations are often pursued to achieve strategic objectives such as expanding market reach, gaining new technologies, achieving economies of scale, or diversifying product lines.
Example:
Company A wants to expand its product line and market presence. It decides to acquire Company B, a smaller competitor, for $50 million. Company A purchases 100% of Company B’s shares, thereby gaining control over Company B.